African American businessperson Reginald F. Lewis (1942-1993) was best known for his unprecedented leveraged buyout of Beatrice International Food Companies in 1987, creating TLC Beatrice. The deal was notable both as the biggest acquisition of overseas assets by any American company and because it rendered TLC Beatrice the largest African American business in the United States. Lewis was also a well known philanthropist, and his hometown of Baltimore honored him posthumously with the 2004 opening of a cultural museum bearing his name.
Lewis was born to Clinton and Carolyn Lewis on December 7, 1942, in Baltimore, Maryland. His father was a civilian technician in the United States Army Signal Corps who went on to be a small business owner and join the navy. After his parents' separation when Lewis was five (they divorced four years later), his mother worked as a waitress and department store clerk before signing on with the postal service. Mother and son lived with his maternal grandparents, Sam and Sue Cooper, for a while, and Lewis was particularly taken with his grandpa's tales of World War I France. In 1951, Lewis' mother married Jean S. "Butch" Fugett Sr. and before long, the only child had five siblings to enjoy.
Lewis showed early business acumen by refusing to give up his paper route when he went away to summer camp at 10. Instead, he drafted his mother for the job and kept his eye on the bottom line. She later recalled to Janice M. Horowitz of Time, "He paid me a salary, but he made sure that he made a profit, believe me."
As a teenager, Lewis was active in sports, even harboring thoughts of someday playing professionally. He was captain of the football, baseball, and basketball teams at Dunbar High School in East Baltimore, as well as being the school's star quarterback. Part - time and summer jobs in a drugstore and the local country club also kept him busy. And although Lewis was not a stellar student, he worked hard and managed his time efficiently. "He put a lot of time into his studies," his mother told Horowitz. "He didn't goof off." That kind of focus would serve him in good stead in the future.
Lewis entered Virginia State College (now Virginia State University) on a football scholarship, but quit playing after his freshman year. He discovered an affinity for economics, and graduated in that discipline in 1965. A college job selling photographic services also honed his salesmanship skills. He went on to Harvard Law School and received his law degree in 1968.
From Lawyer to Entrepreneur
Upon graduating from law school, Lewis went to work for the prominent New York City law firm of Paul, Weiss, Rifkind, Wharton & Garrison. Two years later, he struck out on his own, founding one of Wall Street's first African American law firms, Murphy, Thorpe & Lewis. The firm later evolved into Lewis & Clarkson and specialized in venture capital. Its major clients included Aetna, Equitable, and General Foods. For all his success, however, Lewis was not content. "There was not a lot I could do with the law firm besides making a good living(,) unless I did the deals myself," he told Andrew Kupfer of Fortune. Equally telling were his words to Horowitz: "I like to stretch myself. I like to face challenges." So once again, Lewis went his own way.
In 1983, Lewis started the TLC Group, L.P. in order to concentrate on acquisitions and sales. There was always some mystery surrounding what the investment holding company's initials represented, which Lewis cheerfully perpetuated. ("I'm not going to tell you!" was his laughing response to Kupfer's query). But whether it was Tender Loving Care or The Lewis Company, there was no ambiguity about the impact of Lewis' new business.
TLC Group, L.P
A leveraged buyout is the acquisition of a company using mainly borrowed funds, with the resulting debt to be paid out of the company's operations and sales of assets. It is exactly the sort of transaction that Lewis had set up TLC to do, and he wasted little time getting to it. The first company he set his sights on was the ailing McCall Pattern Company of New York City. Founded in 1870, it was one of the oldest sewing pattern companies in the United States and the second - largest one in the business. Lewis saw it as an opportunity.
In January of 1984, Lewis closed a deal to buy McCall's with $24 million in borrowed cash and only $1 million of equity. He promptly instituted such revitalizing changes as adding knitting patterns and greeting cards, along with containing costs and increasing cash flow. It worked. Within three and a half years, Lewis had doubled McCall's profits and was able to sell the company at a stupendous 90 to 1 return. That lent him the credibility to raise the money for the deal of a lifetime.
It is important to recall that in the 1980s, most successful African American businesses sold consumer goods to their own community. Most were also small, primarily because of the scarcity of risk capital available and Wall Street's unwillingness to take African Americans seriously. Lewis' next takeover exploit changed all that.
With the backing of investment banking firm Drexel Burnham Lambert and its infamous takeover expert, Michael Milken, Lewis acquired Beatrice International Foods, an amalgamation of 64 companies in 31 countries, in October of 1987. The price was $985 million. The deal attracted Lewis' interest because, he told Kupfer, "It was something like the gnat swallowing the elephant, which frankly appealed to me." But it was far more than that. It was also the largest leveraged buyout of overseas assets by an American company in history (at that time). Even more importantly, it made the resulting TLC Beatrice the first African American - owned company to top $1 billion dollars in revenue and rendered it the largest African American business in the United States. And it had forever altered the practical potential of black business owners. The first black governor of the Federal Reserve Board, Andrew Brimmer, explained to Robert H. Bork Jr. of U.S. News & World Report, "The importance of Reginald Lewis is that he has demonstrated that he can attract Wall Street financiers and run a business not anchored in the black community." African American entrepreneur J. Bruce Llewellyn chimed in and told Bork, "If you went in and talked about $1 billion prior to Reg Lewis, they'd laugh at you."
Lewis, however, preferred the attention be paid to the success of the deal, not his race. ". . . I think of myself as an American of African descent who's committed to what he is doing," he told Kupfer. "If that work is an inspiration and helps others of my ethnic background, or any other, I'm delighted. But I don't want it to seep into decisions on how we evaluate our business." So he went about running his new business and tried to avoid the furor.
True to form, Lewis began selling the less profitable of TLC Beatrice's various subsidiaries, along with enacting other measures aimed at increasing overall gain. But his progress was not without obstacles. Among these were a failed initial public offering (IPO) of the company in 1989 and two lawsuits stemming from his sale of McCall's. Lewis, however, was not a man to be cowed by setbacks or challenges. Indeed, responding to criticism that the IPO would have unjustly enriched him, Lewis told Fortune's Erik Calonius, "One man's greed is another man's incentive." In any event, TLC Beatrice had revenues of $1.54 billion by 1992, over $2 billion in 1996, and was still a healthy concern in 2004.
Philanthropy, Death, and Tribute
In 1987, the year of his historic buyout, Lewis established the Reginald F. Lewis Foundation. Through that institution, he gave away millions of dollars and became known as a committed philanthropist. Those gifts included donations to Virginia State University, Morgan State University (to create a scholarship in his name), and Howard University. In 1992, his $3 million gift to Harvard University Law School was the largest ever donated by an individual. Harvard reciprocated the following year by naming its first building in honor of an African American, The Reginald F. Lewis International Law Center. Lewis was also active in politics, contributing to the political aspirations of such people as Reverend Jesse Jackson, former New York City Mayor David N. Dinkins, Virginia Governor L. Douglas Wilder, and Los Angeles Mayor Tom Bradley.
Beyond business and philanthropy, Lewis was a devoted family man with a taste for quality. His 1969 marriage to attorney Loida Nicolas was his only one and produced two daughters, Leslie and Christina. He became interested in art in the 1960s and accumulated an impressive collection over time. He was also a wine connoisseur, an avid tennis player, and spoke fluent French. He had even begun work on his memoir, Why Should White Guys Have All the Fun? How Reginald Lewis Created a Billion Dollar Business Empire. (The book was finished posthumously by Blair S. Walker). But fate played Lewis an ugly trick.
Lewis was diagnosed with brain cancer late in 1992. Just two months later, on January 19, 1993, the business power who revolutionized Wall Street's perceptions died of a cerebral hemorrhage. He was only 50 years old.
Lewis' untimely death was much lamented. There was a large funeral in Baltimore, followed by a memorial service in New York City. Hundreds of people, including such luminaries as Dinkins and opera singer Kathleen Battle, showed up to pay their respects. But a more lasting tribute would take place in 2004 with the opening of the Reginald F. Lewis Museum of Maryland American History and Culture in Baltimore. Dedicated to African American history and culture, the museum was to be the largest of its kind on the East Coast. It was 82,000 square feet, and included two classrooms, exhibition galleries, an oral history recording studio, and information resource center, a 200 seat theater, a museum shop and an eatery. The museum was a fitting homage to the native son of Baltimore who had accomplished and given so much. His widow, who had taken the helm of TLC Beatrice in 1994 and continued as chairman and CEO in 2004, expressed her pleasure with the tribute to Siobhan Benet of Black Enterprise. "There is an African saying that says(,) (')as long as someone mentions his name, he lives('). With this museum, my beloved lives a long, long time."
Books
Notable Black American Men, Gale Research, 1998.
Periodicals
Black Enterprise, March 1993; May 2004.
Fortune, September 14, 1987; January 4, 1988; January 15, 1990. Jet, April 26, 1993; July 8, 2002.
Time, August 24, 1987.
U.S. News & World Report, August 31, 1987.
Online
"Loida Nicolas Lewis: 'Why Should Guys Have All the Fun?'," Stony Brook University, http://www.sunysb.edu/sb/wang/lewis/shtml (December 3, 2004).
"Paul, Weiss, Rifkind, Wharton & Garrison LLP," http://www.paulweiss.com/home.html (December 14, 2004).
"Reginald Lewis," infoplease, http://print.infoplease.com/ipa/A0878496.html (December 3, 2004).
"Reginald Lewis, Savvy in Business and Racially Tuned In," African American Registry, http://www.aaregistry.com/african - american - history/623/Reginald - Lewis - savvy - in - business - and - racially - tuned - in (December 3, 2004).
